MATTERS OF PUBLIC IMPORTANCE- HIGHER EDUCATION

Posted by Kim Carr5sc on March 05, 2015

Senator KIM CARR(Victoria) (16:02): The Minister for Education, Minister Pyne, apparently will do anything to try to persuade crossbenchers to support his unfair and unnecessary university package. He appears to be so desperate that he is now apparently abandoning a pledge repeated many times since these so-called reforms were announced in the budget. Hitherto, the minister has insisted that there would be no risk of price gouging if universities were allowed to set student fees at any level they want. But now Minister Pyne has belatedly realised that overcharging is a real prospect, and he is considering including a backdoor student tax in his package, a tax that will be imposed on universities if they raise fees over a set amount, a tax that will effectively force the fees that the students have to pay to actually go even higher. There could be no clearer admission—none whatsoever—that the government now acknowledges that the minister's fee package will lead to the $100,000 degree.

The minister does not like calling his new measure a tax. He prefers euphemisms like 'levy' or 'fine'. But let's speak plain English. This extra charge would be paid into consolidated revenue. It is a tax. This is a tax that will be imposed on students' fees even before they start repaying their HECS debts. The minister has no excuse for pretending that this will not further increase the cost of degrees. He does not have to do the maths to check this out. It has already been done for him. The backdoor student tax is a suggestion that has been made by Professor Bruce Chapman, and it is described in his submission to the current Senate inquiry. The Grattan Institute's Higher Education Program Director, Mr Andrew Norton, has modelled its effects, and he says:

“Using the tax rates—

and I emphasise the words 'tax rates'—

in Chapman's submission, and a fee of $30,000 for a law student, we estimate a tax—

and I emphasise the word 'tax'—

of more than $11,000 …”

This is from the government's own adviser, Mr Andrew Norton. You might feel that that is too bad for the lawyers, although many of them will not end up working in their chosen profession. But the calculation is exactly the same for veterinary scientists. It is almost identical for agricultural students, for engineers, for architects and for health scientists.

Mr Norton is a former adviser to Mr Pyne. Mr Pyne should heed his warning on the consequences of adopting this tax. The minister should also follow the counsel of his ideological cousins, the UK Tory government. In 2010 the British government rejected a similar proposal because it feared a student tax would force fees higher and put more strain on a student loans scheme in England. This is what the then UK Minister for Universities, the Rt Hon. David Willetts MP, had to say:

… “as soon as universities raise their fee above the threshold level, they face a rapidly rising levy which can drive their fees up even higher in order to reach a given level of income.”

This is precisely what will be happening here if this tax and the uncapped fees of deregulation become law. The notion this minister is peddling that a student tax would act as a brake on fees is a great fantasy.

The tax proposal is further proof of the minister's greatest miscalculation in his plans for deregulation. He fails to understand, or perhaps somewhat stubbornly refuses to admit, the financial consequences of his plans not just for universities but also for students and particularly for the nation as a whole. Unregulated fees will fuel inflation, increasing the cost of living for all Australians. And as far as transferring costs from taxpayers to students, higher fees will actually increase the cost burden for taxpayers.

Already, the official budget documents show the total HELP debt blowing out from $25 billion to $52 billion in 2017-18. NATSEM's analysis shows that it is very likely that the proportion of bad debt will increase from 17 per cent to 30 per cent. The cost to taxpayers will blow-out by $3 billion a year. That is a lot of bad debt that exceeds anything this minister claims to be making as a contribution to the deficit. One can only imagine how grateful his colleagues in Treasury must be at the prospect of increasing fees leading to higher debts, which of course leads to higher bad debts because people simply cannot afford to pay them.

Minister Pyne has yet to grasp the consequences of deregulating fees. The message has not been lost across this country. The minister likes to pretend that all vice-chancellors are singing from the same song sheet on deregulation. Nothing could be further from the truth. The discords in the choir are becoming more and more audible over time.

While studying the warnings of Mr Norton and the United Kingdom government about the implications of a student tax, Mr Pyne should also read carefully the submissions to the current Senate inquiry. In particular, he should have a look at the RMIT University submission, which has this to say about the income-contingent loans and fee deregulation:

There are genuine concerns that the combination of fee deregulation and income-contingent loans provides an unsustainable funding environment and one that will compound student debts beyond reasonable or manageable levels.

The University of Canberra's submission expresses the same concern:

When coupled with a likely increase in 'default' by graduate debtors, it seems to us quite possible that the proposed funding scheme will become more expensive to the taxpayer than the current one.

The submission concludes with a stark warning:

Doing nothing would be better than plunging into the unknowable.

Mr Pyne should listen to the expert advice from the sector and from his own ideological allies about the dangers in the present course of action he is following. He should also listen to the Australian people, who have made it abundantly clear that they do not want an Americanised higher education system with its $100,000 degrees nor will they want a student tax that drives the cost of degrees even higher.

It is time for Mr Pyne to prove that he can learn. And instead of making his package even worse by the inclusion of a student tax, a great big new tax—that is exactly what it is—he should withdraw the bill and go back to the drawing board. The minister has simply failed for what he should have done at the beginning—that is, to talk to people on a broad basis. He should have gone through a process of having a green paper and a white paper to actually have a process where people can examine the details of his proposal. For the government to claim that they know nothing about this proposal after having hawked it around in secret across the corridors of this chamber and having, of course, seen Professor Chapman's own submission where he said:

We spent several days with technical staff in the department developing our suggestion …

Professor Chapman also tells us that he has put in a submission to the Senate inquiry with the permission of the department and the minister himself. For the minister now to claim that he knows nothing about it, having thrown his proposal around and having tried to persuade senators that there is something different about this—

Senator Birmingham interjecting—

The ACTING DEPUTY PRESIDENT (Senator Gallacher): Order! Order on my right. Senator Carr could you resume your seat. Senator Birmingham, each senator is entitled to be heard in silence. Thank you Senator Carr.

Senator KIM CARR:It is a preposterous suggestion that this minister, through the goodness of his heart and because he is a decent man, provides access to the department to the top officials for several days, so that anybody can come along and develop a nice new plan.

The facts are clear: this is the last desperate throw of the dice by a desperate government, which is determined to try to impose a $100,000 degree regime on this country, which is determined to destroy the public education system of this country and which is oblivious to the social, economic and, might I even say, political consequences for the welfare of his own government. What we do know is that Professor Chapman has rung the bell on this. Unethical price rises will follow from the government's proposal, despite all the claims to the contrary by this government to date, and now the government is actually acknowledging that.